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MichCon Wants Rate Hike, Says Bills Would Be Less

The Associated Press

LANSING, Mich. (AP) — Michigan Consolidated Gas Co. wants to charge more to deliver natural gas to customers in 2010 but says the average residential customer's heating bill still would be less than it is now.

That's because customers are using less heat and natural gas is cheaper, according to utility officials who expect the trend to continue.

MichCon, a subsidiary of DTE Energy Co., the state's largest utility, on Tuesday filed a request with the Public Service Commission to raise base distribution rates for the first time since 2005. The rate covers the cost to deliver gas to homes and businesses, maintain the distribution system, make repairs and offer customer service.

The utility says that even with the rate increase, a customer's total gas bill in 2010 will be 5 percent less than in 2008. The average annual residential bill was $1,500 in 2005 and is projected to be $1,160 in 2010, a 23 percent decline. The average yearly bill was $1,224 last year.

The annual distribution charge would go from $315 to $379 a year — generating $193 million in revenue for MichCon. The distribution charge accounts for about one-third of a typical customer's bill.

MichCon President Jerry Norcia said the rate increase is needed to safely maintain the distribution system and provide appropriate levels of reliability and customer service.

He attributed half the drop in heating bill costs to customers' conservation efforts and the other half to the lower cost of gas. He said customers are waiting longer to turn on their furnaces in the fall and turning them off sooner after winter.

MichCon has 1.2 million customers.

Regulators have about six months to rule on MichCon's proposed rate increase. If they do not issue an order before January, MichCon can automatically raise rates on its own for an interim amount of time.